Have you heard one of those ‘rags to riches’ story through Bitcoins?

Cryptocurrencies in India are helping thousands create this story for them.

Wait, but wasn’t cryptocurrency illegal in India? Has the government allowed the trade of cryptocurrencies yet?

Cryptocurrency in India is unregulated, but that doesn’t mean that it is illegal. As the Government is currently planning on how to regulate it, the Income Tax Department is clear on the taxation front.

Surprisingly, this ambiguity hasn’t stopped people, especially millennials from jumping on to the crypto train. Indian Millennials are spending millions on trading in cryptocurrency daily. This is highlighted by the growth of Indian Crypto-Exchanges like CoinDCX and WazirX seeing upwards of $25M worth of trading everyday. 

Everyone has heard about BitCoin. However, the recent surge in meme coin like Dogecoin, highlights as some traditional investors call it, the speculative side or the FOMO side of CryptoCurrency Trading.

Regardless, Crypto space is an exciting space and there are some serious questions that we plan to answer through this blog post:

Will my crypto gains be taxed?

Are cryptos legal according to the Indian Government?

If the cryptos are taxed, how do I file them?

Let us dive in a little deep to find answers to all these questions.

Cryptocurrency Trading in India

Crypto trading has faced a lot of regulatory challenges in India. RBI initially banned cryptocurrencies. However, the Supreme Court quashed the RBI ban and legalised  crypto trading again from March 2020 onwards. Since then, banks and financial institutions could trade in digital currencies again. As soon as the ban was lifted, the number of transactions skyrocketed. However, this tip-toeing of the government meant ambiguities persisted for investors, especially in the tax treatment of crypto-gains. 

Ambiguity Around Taxes on Cryptocurrencies

Cryptocurrencies can be acquired in various forms and are not functionally similar to other assets. This has created quite an ambiguity as to how the tax is to be levied on the profit arising from different crypto-transactions.

Let us look at each of the scenarios. It is important to note: regardless of the regulatory ambiguity, income from crypto trade or use will be taxed.

Case 1: Mining

Any cryptocurrency created by mining is a self-generated capital asset. A self-generated asset is any asset which does not cost any thing to the assesses in monetary terms relating to its acquisition or creation.

If you sell the currency further, your profits arising out of it will give rise to capital gains.

However, the twist here is that you cannot determine the acquisition cost of a self-generated asset.

Also, cryptocurrencies do not come under Section 55 of Income Tax Act, 1961, which provides a definition for cost of acquisition of self-generated assets. You can not tax capital gains without knowing the cost of acquisition.

Hence, no capital gains tax will be levied on mining of cryptocurrencies.

Case 2: Cryptocurrency held as an Investment and being exchanged for Fiat Money

The gains realized on holding cryptos for less than 3 Years and exchanged for fiat money will be taxed as Short Term Capital Gain (STCG).

Short term capital gains are taxed at the individual slab rate.

However, if the cryptos are held for more than 3 years as an investment, then they are taxed as Long Term Capital Gains (LTCG).

Long term capital gains are taxed at a flat rate of 20%.

Case 3: Cryptocurrency held as stock-in-trade being exchanged for Fiat Money

If you realise an income in the form of cryptocurrencies by transferring your stock in trade, it will be considered as income from business.

Now, stock in trade is any equipment, merchandise, or materials necessary to or used in a trade or business.

One can in their Income Tax Return classify their crypto trade activity as a part of their business. Then income from crypto currencies will be considered as income from business.

Any such profits would be subject to taxes as per individual slab rates.

Case 4: Cryptocurrency Exchanged Against Sale of Goods and Services

Any cryptos exchanged against sale of goods and services shall be treated at par with receipt of money.

Just like receipt of money, it will be considered as income in the hands of the recipient.

Further, since you received this income out of a business or profession, you will be taxed, normally, under the head profits or gains from business or profession.

So, how to File Taxes on Cryptos?

Now that, it is established that cryptocurrencies are legal in India, it has also been established that you will be taxed on any profit arising out of them.  It is important to know how you should pay taxes on these crypto earnings. 

According to the Central Board of Direct Taxes, it is mandatory that you declare and pay the relevant tax on your income/ profits from your cryptocurrencies.

As mentioned above, any profits arising from cryptocurrency will be taxed as short term or long-term capital gains.

However, because of the ambiguity on cryptos and owing to the fact that Indian Government does not consider crypto as a legal tender of currency, the debate on the head under which they can be declared still continues.

If experts are to be believed some think they come under Income from Capital Gains, while some believe they should fall under Income From Other Sources.

How can Quicko Help you file Taxes on your Crypto Gains?

Quicko has simplified taxes for capital traders in the last 2 years, we are now onto simplifying taxes for crypto traders. Currently, we offer CA assisted Tax preparation and filing for Crypto Traders. But, keep a look out for this place we have some exciting news coming up for Crypto traders!

For any doubts and questions regarding taxes on crypto currencies hit us up at TaxQnA and we’ll be happy to help!

There has been a lot of buzz around the New & Old Tax Regime, since it was announced by the finance minister Nirmala Sitharaman in Budget 2020.

Where under the Old Tax Regime, you can take advantage of the itemized deductions, as per the old slab rates. The New Tax Regime offers lower tax rates, but you need to let go of the itemized deductions.

Now, how can you opt for the New Tax Regime? Where you have more freedom to chart out your financial goals.
If opting for the New Tax Regime, you need to file Form 10-IE before filing the Income Tax Return.

What is Form 10-IE?

Any taxpayer opting for the New Tax Regime, is required to file Form 10-IE, released by the The Central Board of Direct Taxes (CBDT).

The aim for this form is to tell the Income Tax Department, your choice of the Tax Regime. If you are opting for the New Tax Regime you need to indicate your preference under Section 115BAC by filing Form 10-IE.

If you choose to continue with the Old Tax Regime, you do not need to file Form 10-IE.

You can switch between the two regimes, every year if you have any income other than business income.

You are required to file Form 10-IE every year before filing the ITR, if you are opting for the New Tax Regime.

Switching Between Regimes

If you have any income other than business income, then you have the option of switching between regimes every year. You must file the Form 10-IE, every time you opt-in or continue with the New Tax Regime.

In case you have a business income you can not switch between the regimes every year, but you still need to indicate your preference for the said financial year before filing the ITR.

Information Required in Form 10-IE

Here’s a list of all the information you need to keep in handy while filling the form:

• Name of the individual/HUF
• Confirmation – Whether the individual/HUF has any income under the head profit or gains from business or profession
• PAN
• Address
• Date of Birth/Incorporation (in dd/mm/YYYY format)
• Nature of Business/Profession
• Confirmation – If taxpayer has any unit in International Financial Services Centre (IFSC), as referred to in sub-section (1A) of section 80LA. (if yes, the details have to be provided)
• Details of the previous form 10-IE filed (If applicable)
• Declaration

Due Date to Submit  Form 10-IE

If you are opting for the New Tax Regime, you need to file Form 10-IE before filing the ITR.

The Due date to file ITR is 31st July in case tax audit is not applicable.

In case tax audit is applicable the due date to file ITR is 31st October. Hence you need to file Form 10-IE as applicable before filing your ITR.

Forgot to File Form 10-IE?

If you forget to file Form 10-IE, then the Income Tax Department may disallow you to avail the tax rates under the New Tax Regime. The Income Tax Department may then calculate your income tax liability based on the existing/Old Tax Regime.

E-Filing of Form 10-IE

Download Form 10-IE

You have to file the form electronically on the IT Portal. You can either use a digital signature certificate or electronic verification code for the same.

ITR 1 and ITR 4 utilities are already out. We have observed that we have to mention the filing details of Form 10-IE, i.e., date of filing Form 10-IE and acknowledgement number of the form filed while filing in the income tax return.

So, if you are opting for the New Tax Regime, it is important you file Form 10-IE. Ensure that you furnish all the information required in the form timely, to avoid any hiccups in the future. 

Got questions around Form 10-IE? Shoot’em at TaxQ&A and we’ll answer them in the simplest way possible.

Is your Income Tax refund processed but not yet credited?
This might happen when your primary bank account is not pre-validated. To pre-validate your bank account, you must also ensure that your primary bank account is linked with you PAN.

Why and how to pre-validate your account?

On March 1st, 2019, the Income Tax Department announced that it will only issue refunds to pre-validated bank accounts.

Here are the steps to pre-validate your bank account

1. Visit the Income Tax E-Filing portal
2. Navigate to ‘pre-validate bank account’
3. Pre-validate after entering the required details and click submit

Pre-validate your Bank Account

Steps to pre-validate your bank account

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Pre-validate your Bank Account

Steps to pre-validate your bank account

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Request to Refund Reissue

Once your bank account is pre-validated, you have to submit a refund reissue request to receive your refund.

Follow the steps below to receive your refund:

1. Login to your E-Filing Portal
2. Go to ‘My Account and select ‘Service Request’
3. In ‘Request Type’, select a New Request and the request category as ‘Refund Reissue’
4. Once you submit, you will be shown all Pre-validated Bank Accounts
5. From the list, select your bank account
6. On continuing, you will have to verify all your details, i.e., Bank Account Number, IFSC, Bank Name, Account Type.
7. Once you click ‘OK’, a pop-up for e-verification will be displayed.
8. On completion of e-verification, you will be able to submit your request.

Request to Reissue Refund

Learn the steps to submit a refund reissue request

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Request to Reissue Refund

Learn the steps to submit a refund reissue request

Read More

Tracking ITR Refund:

Once you resubmit your refund reissue request, you will be able to track it on Quicko’s Website. All you need to do is enter a few details to track your refund.

1. Enter your PAN details
2. Enter the Assessment Year for your refund and track your ITR

So, next time you see your refund is not credited, you must check for the pre-validation.

Got a question? Shoot’em on TaxQ&A and we promise to answer them all in the simplest way!

Are you also a gaming buff? Do you love playing online fantasy games? Did your Dream11 team just win a match?

Well, if you are into online fantasy games and you earn from it, know how you maybe taxed for it.

The Public Gambling Act, 1857 (PGA) regulates all kinds of betting and gambling. According to the act betting and gambling is prohibited on games of chance.

 So, does that mean you have been involved in illegal activities so far?

The answer to your question is NO. Here is where the concept of Online Fantasy Games comes in. Now, the PGA allows betting and gambling on games of skills but not on games of chance.

Various courts have reasoned that a user’s use of ability-based superior intelligence, judgement, and focus is crucial in determining the aspect of skill in fantasy games. Also, the outcome is independent of whether a single team wins or loses in a real-world game. Hence, betting and gambling in fantasy games is legal. So, Game on?!

Tax Implications in Fantasy Sports

Fantasy sports and online betting winnings are taxable under Section 115BB of the Income Tax Act (ITA). They come under the head ‘Income from Other Sources’. The standalone provision includes winnings from lottery, crossword puzzle, horse race, card games, betting, gambling, or any other games. Further, Section 58(4) of the ITA provides that no deduction or expenditure is allowed to be claimed against such income.

Tax on Prize Money and Winnings

You are liable to pay taxes on the entire amount of winning at a flat rate of 30%. This rate is exclusive of cess and surcharge without the benefit of basic exemption limit (usually, INR 2,50,000). If your winnings exceed INR 10,000 per contest, the platform paying out the amount will deduct TDS.

The said deductions will be made under section 194B of the ITA. The TDS deducted and deposited on your behalf by the online gaming platform, will be reflected in your Form 26-AS. You claim the tax credit when while filing your ITR.

No Deduction or Expenditure Allowed

It is important to note that the income tax is to be paid on the entire winnings. No deduction in respect of any expenditure or deduction is allowed.

While the word “winnings” was established by the CBDT in its circular no. 240 of 1978 to mean gross winnings minus the sum expended in the form of a bet, the definition was changed in 1995 when Section 58(4) of the ITA was enacted. It has now been decided that no such bet paid/entry fee expenditure would be permitted as a deduction.

With online fantasy sports betting is legal in India, you should be mindful of the aforesaid tax implications while filing your income tax returns.

Got a question? Shoot’em on TaxQ&A and we promise to answer them all in the simplest way!

Are you filing your ITRs timely? Paying all your taxes? Have all your bills and receipts in place? Still wondering why has the Income Tax Department targeted you?

The Income Tax Department has been doing a 360 degree audit of its tax payers.

I am sure all of us have come across stories of leading business tycoons Bollywood stars, political leaders where their houses and workplaces were being raided by the Income Tax Department. We’ve also heard numerous controversies that came out of it.

But what happens when the same happens to a common man?

So, can you come under the radar of Income Tax Department even when you have not done anything legally wrong?

You’ll be surprised to know that you can come under the Income Tax Department’s radar when you make the following transactions. Let’s have a look at all possible scenarios.

• 

Statement of Financial Transactions

Statement of financial transactions is a report of specified financial transactions by specified persons.

If you fall under the category of specified persons then you are under a mandate to submit SFT to the Income Tax Authority. You can also submit it to such other specified authority or agency. If you register, maintain or record such specified financial transactions, then you come under the specified person’s category.

You also need to file an Annual Information Report to report such transactions.

High Value Transactions

The government has identified new high-value transactions, such as:

• Domestic business-class air travel/foreign travel
• Payment of educational fee/donations
• Purchase of jewellery
• Purchase of white goods
• Purchase of paintings
• Purchase of marble
• Electricity consumption above INR 1,00,000

A proposal was passed to include them in the reporting of SFTs.

Insurance Premium Payments

The following premium payments can come under the radar of Income Tax Department:

• Life insurance premium payments over INR 50,000
• Health insurance premium payments over INR 20,000. As the Income Tax Department plans to expand it’s scope of reportable financial transactions under the SFTS, it may scan the payment on these premiums

Hotel Spends

Did you know that Income Tax Department has always been your travel buddy? The Income Tax Department may scan any of your hotel transactions above INR 20,000.

Financial Security Investments

If a company has a receipt of INR 10,00,000 or above from an investor, it is liable to report it to the Income Tax Department.

The investment made by the person should be on the form of acquiring:

• Shares
• Debentures
• Bonds
• Mutual Funds

Credit Card Bill Payments

You are likely to come under the radar of Income Tax Department if:

• You make credit cards bill payments of more than INR 1,00,000 p.a. in cash
• You make credit cards bill payments of INR 10,00,000 p.a. through NEFT

Transactions in Your Account

Current Accounts Deposits

The following payments pertaining to the current accounts of any person needs to be reported to the Income Tax authorities by the bank:

• Cash deposits or withdrawals exceeding INR 50,00,000 in a financial year
• Purchases of bank drafts or pre-paid instruments issues by RBI, exceeding INR 10,00,000 in a financial year

Cash Deposits

Cash deposits made amounting INR 10,00,000 or above in a person’s account need to be reported by the banks.

Immovable Property

Sales and purchase of immovable property above INR 30,00,000 must be reported to the Income Tax authorities through the Registrar of Properties.

Foreign Currency

If you are an authorised individual, as Foreign Exchange Management Act, you must register any receipts for the selling of foreign currency. These receipts must be totaling INR 10,00,000 or more in a financial year.

Now, chances are your transactions might fall under at least one of the mentioned cases. However, you need not worry about any of this if you have already reported your information to CBDT. Nonetheless, there is nothing to be concerned about if all your transactions are reported and you have all your receipts ready.

Got questions around any of these? Shoot ’em on TaxQ&A and we’ll take care of the rest.